Real estate in Portugal: what taxes to pay, so as not to have problems with the law

April 19, 2021
Residence permit in Portugal by investment: real estate taxes
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Property taxes in Portugal depend on different factors: the value of the property, rental income or capital gains. We tell you what property taxes are applicable in Portugal in 2021.

Property Transfer Tax, or Imposto Municipal sobre Transmissoes (IMT). A municipal tax on the purchase of the real estate, which is paid in a single payment. The tax rate is often revised and depends on the value, type, purpose and location of the property.

The tax rate on transfer of ownership in 2021

Cost of the facility 🏠 Tax rate 📊
Up to € 92,407 0%
From € 92,407 to € 126,403 2%
From € 126,403 to € 172,348 5%
From € 172 348 to € 287 213 7%
From € 287,213 to € 574,323 8%
Over € 574,323 6%

IMT must be paid at the local tax office after signing the preliminary contract, but not less than three days before the final transaction.

Annual municipal tax IMI. Paid after the purchase of the real estate. The rate is 0.3—0.5% of the value of the urban property and up to 0.8% of the value of the rural property. Municipalities independently calculate the tax rates, which vary from locality to locality.

The deadline for payment is the last day of the tax year, which ends in April. If the amount of tax exceeds € 250, it is allowed to pay twice a year: in April and November.

Taxes are exempt from payment:

  1. Low-income households – up to € 15,295 if the value of the building does not exceed € 66,500.

  2. Owners of buildings that are to be renovated at the expense of the city. But they will be taxed after 3 to 5 years.

Stamp duty. A one-time tax on the purchase or sale of real estate. The rate is 0.8% of the transaction amount.

Wealth Tax. Real estate worth more than € 600,000 is subject to the AIMI (Imposto Municipal Sobre Imóveis) tax. It is an additional tax in IMI, the rate is on average 0.7% of the value of the property.

For married couples who file a general tax return, the calculation of the wealth tax begins on properties worth € 1.2 million or more.

Income tax. In Portugal, income tax is made up of different income of a citizen or resident, such as salary, pension, renting out real estate. The tax rate is calculated on a progressive income scale.

Investors who have received a residence permit in Portugal are subject to an exceptional tax regime. Under it, it is allowed to pay income tax at a flat rate of 20% for the first 10 years of residency.

Income from renting out real estate is also taxable. The amount is added to the resident’s total annual income, which is already taxable.

Income tax rate in Portugal in 2021

Income💰 Tax rate📈
Up to € 7,112 14,5%
From € 7,112 to € 10,732 23%
From € 10,732 to € 20,322 28,5%
From € 20,322 to € 25,075 35%
From € 25,075 to € 36,967 37%
From € 36,967 to € 80,882 45%
More than € 80,882 48%

Capital Gains Tax. When selling real estate, residents of Portugal pay tax on 50% of the profits. For example, if a resident sells an apartment for € 60,000, the tax will be charged only half – € 30,000. The amount of profit is also added to the total to the annual income of the citizen. The entire income is then taxed at the appropriate rate of the income tax scale.

No tax is due if the citizen or resident sells his or her primary residence and invests all of the income into the purchase of a new property, which will become the new primary residence. But if it turns out to be cheaper, the tax must be paid on the difference between the sale and purchase price.

Pensioners and residents who are over 65 years old can reinvest the capital gains into a pension fund or insurance company within 6 months of selling the property.

Inheritance tax. The tax was abolished for spouses, children, parents, and grandchildren in 2004. If an inheritance is received by a distant relative or a person who is not a family member, the tax applies and is charged at the rate of 10%.

How many investors chose the real estate option

91% of investors bought real estate in Portugal in order to obtain a temporary residence permit. They chose between two options:

purchase of
any property🏠

from 500 000 €

purchase of a historic
building for restoration🏗️🏚️

from 350 000 €

Investors most often buy real estate in Lisbon, Porto and resort cities in Portugal. But from July 1, 2021, the terms of the program will change. Investors will not be able to buy real estate option from € 500,000 in these cities. There is still time to apply for the program.

The new rules came about because the Portuguese government wants to redistribute investment and attract more investment in government bonds, science and culture. We told about the future changes in the article: “Real estate in Porto and Lisbon will be excluded from the residence permit program in Portugal”.

Examples of real estate for participation in the program «golden visa» Portugal

Residence permit in Portugal by investment: real estate that you can buy under the program

Apartments and villas in a golf resort in Faro, Portugal. The value of the share — from € 285,000. The investor can live in the apartments or rent them out and earn an income of up to 5% per annum

Residence permit in Portugal by investment: real estate that you can buy under the program

Apartment with three bedrooms in the residential complex Saldonje in Lisbon, Portugal. Price — from € 565,000. You can also buy in the complex commercial space for the store from 1.1 million euros

Residence permit in Portugal by investment: real estate that you can buy under the program

Modern villa in a private condominium with its own golf course in Sesimbra, Portugal. Value — about 1.3 million dollars

Residence permit in Portugal by investment: real estate that you can buy under the program
Residence permit in Portugal by investment: real estate that you can buy under the program
Residence permit in Portugal by investment: real estate that you can buy under the program

How to get a residence permit in Portugal in 2021

It is possible to get a residence permit in Portugal by naturalization, employment contract or studying. But the fastest way is by investment.

Portugal has a residence permit investment program for foreigners. Investors choose one of 8 investment options and are granted residency status. Along with the investor, family members can get a residence permit.

Investment options under the residence permit program in Portugal

Option📋 Investments💰
Buying real estate From 350 000 €
Deposit in a Portuguese bank From 1 million Euros
Buying government stocks From 1 million Euros
Acquisition of shares in investment funds From 350 000 €
Investments in scientific research From 350 000 €
Investments in cultural heritage From 250 000 €
Establishment of a company with headquarters in Portugal and 5 jobs From 350 000 €
Establishment of a business and the creation of at least 10 jobs The amounts are not indicated in the law

It takes at least two months to obtain the status of a residence permit. The investor and his family do not need to pass a test of the language and history of the country, as well as live on the territory of Portugal. It is enough to spend 7 days in the country to retain residency status.

Portugal is a member of the European Union, so its residents are free to travel in the Schengen

Immigrant Invest is a licensed agent of the residence permit program in Portugal. If you want to move to Portugal and travel to Schengen countries without visas, seek advice from investment program experts.

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